IDEAS home Printed from https://ideas.repec.org/a/eee/asieco/v87y2023ics1049007823000416.html
   My bibliography  Save this article

Higher education expansion and domestic value added in exports: Theory and evidence from China

Author

Listed:
  • Du, Yan
  • Yan, Jie
  • Cao, Fangzhou
  • Li, Yifei
  • Zhou, Mao

Abstract

This paper analyzes the impact of China’s higher education expansion on domestic value added in exports. To be specific, we firstly construct a nested CES production function model, with import inputs being complementary to skilled labors, and substitutable to unskilled labors. By exploiting China’s higher education expansion as a quasi-natural experiment, this paper accurately examines the causal effect of the human capital expansion on the domestic value-added in exports. The results show that human capital expansion has negative effects on the domestic value-added in exports, and this result is driven by import inputs increase and processing trade engagement. We also find that the effect is more prominent for processing trade, foreign-invested firms, high-tech firms and disciplines of science and engineering.

Suggested Citation

  • Du, Yan & Yan, Jie & Cao, Fangzhou & Li, Yifei & Zhou, Mao, 2023. "Higher education expansion and domestic value added in exports: Theory and evidence from China," Journal of Asian Economics, Elsevier, vol. 87(C).
    • Handle: RePEc:eee:asieco:v:87:y:2023:i:c:s1049007823000416
    DOI: 10.1016/j.asieco.2023.101621
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1049007823000416
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.asieco.2023.101621?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-1037, October.
    2. David Atkin, 2016. "Endogenous Skill Acquisition and Export Manufacturing in Mexico," American Economic Review, American Economic Association, vol. 106(8), pages 2046-2085, August.
    3. Daron Acemoglu, 1998. "Why Do New Technologies Complement Skills? Directed Technical Change and Wage Inequality," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 113(4), pages 1055-1089.
    4. Bas, Maria & Strauss-Kahn, Vanessa, 2015. "Input-trade liberalization, export prices and quality upgrading," Journal of International Economics, Elsevier, vol. 95(2), pages 250-262.
    5. Ludema, Rodney D. & Mayda, Anna Maria & Yu, Zhi & Yu, Miaojie, 2021. "The political economy of protection in GVCs: Evidence from Chinese micro data," Journal of International Economics, Elsevier, vol. 131(C).
    6. Li, Bingjing, 2018. "Export expansion, skill acquisition and industry specialization: evidence from china," Journal of International Economics, Elsevier, vol. 114(C), pages 346-361.
    7. Li, Hongbin & Ma, Yueyuan & Meng, Lingsheng & Qiao, Xue & Shi, Xinzheng, 2017. "Skill complementarities and returns to higher education: Evidence from college enrollment expansion in China," China Economic Review, Elsevier, vol. 46(C), pages 10-26.
    8. Huang, Bin & Tani, Massimiliano & Wei, Yi & Zhu, Yu, 2022. "Returns to education in China: Evidence from the great higher education expansion," China Economic Review, Elsevier, vol. 74(C).
    9. Lu, Ming & Zhang, Xi, 2019. "Towards an intelligent country: China’s higher education expansion and rural children’s senior high school participation," Economic Systems, Elsevier, vol. 43(2), pages 1-1.
    10. Ahn, JaeBin & Khandelwal, Amit K. & Wei, Shang-Jin, 2011. "The role of intermediaries in facilitating trade," Journal of International Economics, Elsevier, vol. 84(1), pages 73-85, May.
    11. Liu, Qing & Qiu, Larry D., 2016. "Intermediate input imports and innovations: Evidence from Chinese firms' patent filings," Journal of International Economics, Elsevier, vol. 103(C), pages 166-183.
    12. Judith M. Dean & K. C. Fung & Zhi Wang, 2011. "Measuring Vertical Specialization: The Case of China," Review of International Economics, Wiley Blackwell, vol. 19(4), pages 609-625, September.
    13. Lamei Wu & Guifu Chen & Shuijun Peng, 2021. "Human Capital Expansion and Global Value Chain Upgrading: Firm‐level Evidence from China," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 29(5), pages 28-56, September.
    14. Alexander Vogel & Joachim Wagner, 2016. "Higher Productivity in Importing German Manufacturing Firms: Self-selection, Learning from Importing or Both?," World Scientific Book Chapters, in: Microeconometrics of International Trade, chapter 4, pages 139-174, World Scientific Publishing Co. Pte. Ltd..
    15. Brandt, Loren & Van Biesebroeck, Johannes & Zhang, Yifan, 2012. "Creative accounting or creative destruction? Firm-level productivity growth in Chinese manufacturing," Journal of Development Economics, Elsevier, vol. 97(2), pages 339-351.
    16. Fu, Hongqiao & Ge, Run & Huang, Jialin & Shi, Xinzheng, 2022. "The effect of education on health and health behaviors: Evidence from the college enrollment expansion in China," China Economic Review, Elsevier, vol. 72(C).
    17. Antonio Ciccone & Elias Papaioannou, 2009. "Human Capital, the Structure of Production, and Growth," The Review of Economics and Statistics, MIT Press, vol. 91(1), pages 66-82, February.
    18. Hummels, David & Ishii, Jun & Yi, Kei-Mu, 2001. "The nature and growth of vertical specialization in world trade," Journal of International Economics, Elsevier, vol. 54(1), pages 75-96, June.
    19. Nataša Vrh, 2019. "The DNA of the domestic value added (DVA) in exports: Firm‐level analysis of DVA in exports," The World Economy, Wiley Blackwell, vol. 42(9), pages 2566-2601, September.
    20. Aichele, Rahel & Heiland, Inga, 2018. "Where is the value added? Trade liberalization and production networks," Journal of International Economics, Elsevier, vol. 115(C), pages 130-144.
    21. Chenggang Xu, 2011. "The Fundamental Institutions of China's Reforms and Development," Journal of Economic Literature, American Economic Association, vol. 49(4), pages 1076-1151, December.
    22. David Hummels & Peter J. Klenow, 2005. "The Variety and Quality of a Nation's Exports," American Economic Review, American Economic Association, vol. 95(3), pages 704-723, June.
    23. Peter K. Schott, 2004. "Across-Product Versus Within-Product Specialization in International Trade," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 119(2), pages 647-678.
    24. Hiau Looi Kee & Heiwai Tang, 2016. "Domestic Value Added in Exports: Theory and Firm Evidence from China," American Economic Review, American Economic Association, vol. 106(6), pages 1402-1436, June.
    25. Upward, Richard & Wang, Zheng & Zheng, Jinghai, 2013. "Weighing China’s export basket: The domestic content and technology intensity of Chinese exports," Journal of Comparative Economics, Elsevier, vol. 41(2), pages 527-543.
    26. Zhi Wang & Shang-Jin Wei & Kunfu Zhu, 2013. "Quantifying International Production Sharing at the Bilateral and Sector Levels," NBER Working Papers 19677, National Bureau of Economic Research, Inc.
    27. Xiong, Weiyan & Yang, Jiale & Shen, Wenqin, 2022. "Higher education reform in China: A comprehensive review of policymaking, implementation, and outcomes since 1978," China Economic Review, Elsevier, vol. 72(C).
    28. Koopman, Robert & Wang, Zhi & Wei, Shang-Jin, 2012. "Estimating domestic content in exports when processing trade is pervasive," Journal of Development Economics, Elsevier, vol. 99(1), pages 178-189.
    29. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2004. "How Much Should We Trust Differences-In-Differences Estimates?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 119(1), pages 249-275.
    30. Jingting Fan, 2019. "Internal Geography, Labor Mobility, and the Distributional Impacts of Trade," American Economic Journal: Macroeconomics, American Economic Association, vol. 11(3), pages 252-288, July.
    31. Johnson, Robert C. & Noguera, Guillermo, 2012. "Accounting for intermediates: Production sharing and trade in value added," Journal of International Economics, Elsevier, vol. 86(2), pages 224-236.
    32. Daron Acemoglu, 1996. "A Microfoundation for Social Increasing Returns in Human Capital Accumulation," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 111(3), pages 779-804.
    33. Ethan Lewis, 2011. "Immigration, Skill Mix, and Capital Skill Complementarity," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 126(2), pages 1029-1069.
    34. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jing Zhao & Wei Wang & Shuhui Zhao, 2024. "Smart Cities and Global Value Chain Upgrading: Evidence from China," Sustainability, MDPI, vol. 16(6), pages 1-23, March.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Yajun Zhu & Churen Sun, 2022. "Carbon Reduction, Pollution Intensity, and Firms’ Ratios of Value Added in Exports: Evidence from China’s Low-Carbon Pilot Policy," Sustainability, MDPI, vol. 14(19), pages 1-26, October.
    2. Yuping Deng & Yanrui Wu & Helian Xu, 2022. "Emission Reduction and Value-added Export Nexus at Firm Level," Economics Discussion / Working Papers 22-19, The University of Western Australia, Department of Economics.
    3. Bao, Xiaohua & Gao, Lei & Jin, Yu & Sun, Jin, 2023. "Industrial agglomeration and firm exports: Micro-evidence based on input-output linkages," Economic Modelling, Elsevier, vol. 119(C).
    4. Yue Lu & Lijing Deng & Ka Zeng, 2022. "Foreign direct investment, innovation, and domestic value‐added in exports: Firm‐level evidence from China," Review of International Economics, Wiley Blackwell, vol. 30(4), pages 1199-1228, September.
    5. Dongwei Wen & Guoming Xian, 2022. "How is China's trade imbalance overstated? An analysis based on trade in value‐added," Review of Development Economics, Wiley Blackwell, vol. 26(3), pages 1361-1392, August.
    6. Alonso de Gortari, 2019. "Disentangling Global Value Chains," NBER Working Papers 25868, National Bureau of Economic Research, Inc.
    7. Songbo Wu & Yue Lu & Xiaofeng Lv, 2021. "Does value‐added tax reform boost firms’ domestic value added in exports? Evidence from China," Review of International Economics, Wiley Blackwell, vol. 29(5), pages 1275-1299, November.
    8. Xinheng Liu & Ziyuan Pan & Dongli Fang, 2023. "Agglomeration, resource reallocation and domestic value‐added ratio in exports," Growth and Change, Wiley Blackwell, vol. 54(1), pages 182-213, March.
    9. Sun, Chuanwang & Zhan, Yanhong & Gao, Xiang, 2023. "Does environmental regulation increase domestic value-added in exports? An empirical study of cleaner production standards in China," World Development, Elsevier, vol. 163(C).
    10. Lamei Wu & Guifu Chen & Shuijun Peng, 2021. "Human Capital Expansion and Global Value Chain Upgrading: Firm‐level Evidence from China," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 29(5), pages 28-56, September.
    11. Yan Du & Yi Lu, 2018. "The Great Opening up and the Roadmap for the Future: The Story of China's International Trade," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 26(2), pages 68-93, March.
    12. Li, Changqing & Lu, Jian, 2018. "R&D, financing constraints and export green-sophistication in China," China Economic Review, Elsevier, vol. 47(C), pages 234-244.
    13. Nenci, Silvia & Fusacchia, Ilaria & Giunta, Anna & Montalbano, Pierluigi & Pietrobelli, Carlo, 2022. "Mapping global value chain participation and positioning in agriculture and food: stylised facts, empirical evidence and critical issues," Bio-based and Applied Economics Journal, Italian Association of Agricultural and Applied Economics (AIEAA), vol. 11(2), July.
    14. Chor, Davin & Manova, Kalina & Yu, Zhihong, 2021. "Growing like China: Firm performance and global production line position," Journal of International Economics, Elsevier, vol. 130(C).
    15. Meng, Ning & Milner, Chris & Song, Huasheng, 2020. "Antidumping and heterogeneous quality adjustment of multi-product firms: Evidence from Chinese exporters," Economic Modelling, Elsevier, vol. 92(C), pages 147-161.
    16. Bie, Xiaodong & Ciani, Andrea, 2021. "Born similar, develop apart: Evidence on Chinese hybrid exporters," DICE Discussion Papers 364, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    17. Pol Antràs & Davin Chor, 2021. "Global Value Chains," NBER Working Papers 28549, National Bureau of Economic Research, Inc.
    18. Yuping Deng & Yanrui Wu & Helian Xu, 2023. "Emission reduction and value‐added export nexus at firm level," The World Economy, Wiley Blackwell, vol. 46(6), pages 1670-1710, June.
    19. Dai, Mi & Maitra, Madhura & Yu, Miaojie, 2016. "Unexceptional exporter performance in China? The role of processing trade," Journal of Development Economics, Elsevier, vol. 121(C), pages 177-189.
    20. João Amador & Sónia Cabral, 2014. "Global Value Chains: Surveying Drivers, Measures and Impacts," Working Papers w201403, Banco de Portugal, Economics and Research Department.

    More about this item

    Keywords

    Human capital; Higher education expansion; Domestic value-added rate;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • I25 - Health, Education, and Welfare - - Education - - - Education and Economic Development
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:asieco:v:87:y:2023:i:c:s1049007823000416. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/asieco .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.